In his February 17th budget address, the governor claimed, “We can pass an oil assessment so that big oil companies, which are still making record profits, pay their share for our roads.” He continued by stating “and we will go after companies that break the law by passing that assessment on to consumers.”

In the budget, Governor Doyle proposes taxing up to 3% of a motor vehicle fuel supplier’s gross receipts. The provision prohibits the supplier from passing the cost to consumers.

Due to the “no-pass-through” provision, Governor Doyle’s promise to not pass the cost to consumers is most likely unconstitutional. Even former Attorney General Peg Lautenschalger had doubts about the constitutionality of the governor’s provision.

In an April 19, 2007 memo Lautenschalger stated, “In 1983, a New York appeals court found that a similar state tax on oil company gross profits shifted the burden of the tax from New York consumers to those of other states. This aspect was found to unfairly discriminate against out-of-state purchasers, in violation of the Commerce Clause. The New York legislature subsequently repealed the tax statute.”

Regardless of your opinion about oil companies and profits, one must realize they sell and compete on a worldwide market. If the state charges a tax which is forbidden from being passed on to consumers, what is an oil company’s incentive to do business in Wisconsin?

The fee will only serve to discourage the wholesale distribution of fuel into the state. When supplies are short, Wisconsin will be last on a distributor’s list when surrounding states do not impose an “Oil Franchise Tax.” Due to the law of supply and demand, prices will definitely increase as the supply decreases.

If the fee imposed on “big oil” is found unconstitutional, then Wisconsin retailers could potentially be held responsible for the tax. This is because a clause in the provision allows regulators to go after others on the supply chain until they find a target to pay “big oil” taxes – our Wisconsin based retailers. This increased cost to the business will be passed to you every time you fill up your tank.

According to the non-partisan Legislative Fiscal Bureau, Wisconsinites currently pay more than 50 cents per gallon in combined federal and state excise taxes on gasoline. Early estimates forecast Governor Doyle’s “Oil Franchise Tax” will push total gas taxes in Wisconsin above 55 cents per gallon, making Wisconsin the second highest taxed state for gas in the nation (second only to New York State).

Two sessions ago the legislature did away with gas tax indexing. Remember that April Fools day surprise? Every year, Wisconsin’s gas tax automatically increased 1 cent without a legislator ever having to take a vote.

Governor Doyle’s administration would be in total control of the new “Oil Franchise Tax.” This means he can raise the tax percentage any time he wants. Once again, the gas tax can increase without any legislative oversight or vote. In other words, this is the rebirth of gas tax indexing.

I propose a simple alternative. Instead of a gas tax increase to fund road construction, I believe that the governor should stop raiding the Transportation Fund for general spending.

Since he was first elected six years ago, Governor Doyle has raided more than $1.1 billion of the money you’ve paid in gas taxes and Department of Motor Vehicle fees to spend on programs other than roads. In this budget he pledges to raid another $77.5 million.

The last concern with this tax is that it threatens jobs. When government increases the price of gas, the price of everything transported by trucks goes up. Businesses cannot afford any further burdens during this down economy. Nor can you afford to pay more for basic necessities like food or clothing.